MNI POLICY: BOJ Wakatabe: Must Contain Costs of Easy Policy

The BOJ should conduct effective monetary easing and must contain the costs of policy measures as much as possible, Bank of Japan Deputy Governor Masazumi Wakatabe said on Wednesday

"It is expected that monetary easing will be prolonged, the BOJ should enhance the sustainability of the conduct of monetary policy during normal times and be nimble in responding to changes in developments in economic activity and prices as well as financial conditions," Wakatabe told business leaders in Yokohama City via an online meeting.

The Deputy Governor, however, did not elaborate of possible measures to be announced at the March 18-19 policy-setting meeting.

Other major comments from his speech:

"'QQE with Yield Curve Control' is a framework for conducting monetary easing while striking a balance between costs and benefits, but it is necessary to seek more effective ways to conduct monetary policy in terms of finding such a balance.," Wakatabe said.

"While it is expected that monetary easing will be prolonged, the BOJ should enhance the sustainability of the conduct of monetary policy during normal times and be nimble in responding to changes in developments in economic activity and prices as well as financial conditions.

"The BOJ could conduct monetary policy more flexibly in a prioritized manner depending on changes in such developments. In conducting the upcoming assessment, I would like to emphasize that the BOJ does not intend to tighten monetary easing. It also does not aim at only containing costs of policy measures. Rather, the BOJ will consider how to be nimble in conducting effective monetary easing while taking care of costs.

"Since downward pressure on economic activity and prices is likely to continue for a prolonged period, it will take considerable time to achieve the price stability target of 2%."